Shares to buy today: Here are stocks investors can bet upon
Smart investors can think of investing in agrochemicals, NBFC and HFC stocks to incur gain in near future.
Asian shares took a breather on Wednesday after rallying the previous day on Chinese stimulus hopes, with investors assessing Brexit options after British lawmakers trounced Prime Minister Theresa May's deal to pull out Britain from the European Union.
In such a market scenario, shares from the IT and tech sectors have given better returns to the investors. So, majority of the investors are looking towards those stocks ignoring the fact that shares dipping down are at the lower levels which creates a better buy option. For such smart investors Agrochemicals, NBFC and HFC stocks can be a better bet today.
Darpin Shah, Analyst at HDFC Securities said in a written statement, "NBFCs have grown significantly ahead of Indian aggregate credit over the last decade (19 per cent CAGR vs. overall credit growth of 14 per cent). This growth can be attributed to both intrinsic and extrinsic factors. Intrinsic factors include their ability to (1) Deliver credit to customers that banks cannot reach, (2) Develop niche credit segments and sticky customer relationships, and (3) Price risk appropriately and manage the lending cycle efficiently." Shah went on to add that given the liquidity issues, a freeze in funding markets and overall rise in interest rates, an increase in CoF for all NBFCs is inevitable. However, the quantum has varied across companies depending on their liability mix, its nature (fixed or floating) and maturity.
On which stock of the NBFC and HFC would give better returns to the market investors Darpin Shah of HDFC Securities said, "Investors can buy MMFS, SHTF, CIFC, LICHF and Repco." He said that MMFS shares are trading at Rs 438 levels and investors can buy this stock for the target of Rs 500."
"On SHTF, the target is Rs 1,520 while its current market price is Rs 1,169. CIFC shares are at Rs 1,190 levels while its target is Rs 1,616. Investors can buy LICHF shares for the target of Rs 534 after taking a buy position at its current market price levels of Rs 478. Similarly, we recommend a buy position in Repco shares whose curent market price is Rs 420. Repco shares can soon show the levels of Rs 585," said Darpin Shah of HDFC Securities.
Betting high on agrochemical stocks Pratik Tholiya, Chif Financial Analyst at Elara Securities said, "The insecticides inventory in the channel is higher by 20 per cent. However, herbicides which comprise 65-70 per cent of total agrichemical sales, have been witnessing steady growth. On the other hand, the fungicides category is small but growing at a fast pace due to rising awareness." He said that most dealers say tepid sales will likely lead to prices of generic products being cut by 5-10 per cent. However, this may not translate into increased sales, as pest incidences have been fairly low.
Hence, sales returns of insecticides in Q4FY19 is likely to be higher, which could dampen industry performance. Increasing awareness of use of fungicides among farmers has resulted in penetration rising from 10 per cent to 35 per cent in three years. This bodes well for the industry as fungicides enjoys better margin than insecticides.
On which stocks he recommend market investors Pratik Tholiya of Elara Securities said, "Our top picks in order of preference are UPL, Insecticides India and PI Industries."
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